2.2 Theory of Mutual Assent

• Library: Contract Law in Virginia (Virginia CLE) (2019 Ed.)

2.2 THEORY OF MUTUAL ASSENT

Mutual assent is the cornerstone of all legally enforceable contracts. A "meeting of the minds" must occur between the parties to form a valid contract. There must be mutual assent between the promisor and promisee. It is critical to a contract's validity that each party agree on and consent to the specific terms and conditions of the contract. ³

Forming a contract often involves multiple exchanges of offers, counteroffers, and complex negotiations between the parties regarding commitments, conditions, and requirements. The final agreement must reflect a "mutual assent of the contracting parties to terms reasonably certain under

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the circumstances" to have an enforceable contract. ⁴ Not only must the parties concur on the basic terms of the agreement, but the minds of the parties must meet on every meaningful detail of the potential contract, ⁵ and there must be no substantial variance between the terms of the offer and the acceptance. ⁶ In other words, it must be clear that the parties have understood and agreed on the subject matter of the contract and the parameters of each party's duties to complete the performance of the contract. Generally, term sheets and letters of intent are non-binding until a more formal contract is executed by the parties, and the non-binding nature of the letter of intent is expressly embedded within the document. However, a binding contract can sometimes result from an informal settlement agreement term sheet—"Where the minds of the parties have met and they are fully agreed and they intend to be bound there is a binding contract, even...